Ritz Interactive shares its 5 top tips on partnerships and acquisitions
Negotiating successful partnerships and acquisitions in a fast-changing Internet retail environment can be challenging, and Ritz Interactive Inc. vice president and chief marketing officer Andre Brysha should know. As part of a growth strategy, his company has made three major acquisitions in the past 24 months – WolfCamera.com, CameraWorld.com and PhotoAlley.com – and considered perhaps 8-12 other acquisitions and partnerships of the same magnitude for its camera business and its BoatersWorld.com site during that time.
Ritz Interactive has developed a five-point framework that it applies in evaluating and structuting all potential partnerships and acquisitions, Brysha told attendees at this week’s eTail 2003 conference in Boston. In a preview of his presentation, Brysha told Internet Retailer that the Internet space is littered with partnerships and deals gone awry when they failed to hit one or more of the five points.
“The first is synergy. In a partnership, you have to look at whether the companies will operate better individually or together,” he says. “Look at Webvan and Home Grocer. Obviously, they didn’t become partners with the thought of going out of business.”
As a second point, both companies must agree on the acquisition or partnership not only in principle and concept, but contractually, Brysha says. And in the case of a partnership, the deal must bring value to both companies, if both will continue to exist under the agreement, or to the acquiring company, in the case of an acquisition.
Companies looking at an acquisition or merger also must make certain they can actually accomplish the implementation they envision. “There are a lot of great ideas out there, but when you try to truly integrate the companies, or the assets you are acquiring, whether they be virtual or physical, it has to be doable,” Brysha says.
The final point of the framework is trust. “You have to be able to believe in the company you are partnering with and trust that everything will happen the way you plan it. We look at different potential partnerships all the time, and the framework applies to how we partner with portals and search engines, too,” he adds.
Critical to the success of structuring any partnership or acquisition and woven throughout the five other points are ROI metrics that must be developed by the partners, be it sales, leads or something else. Brysha points out that one of the advantages of being in an Internet business environment is that such metrics can be measured easily. “You have to apply the framework, but you also have to apply your ROI metrics and make sure you track them. If it doesn’t work, no matter how much you are emotionally attached to a potential acquisition or partnership, you have to be able to walk away from it,” he says.
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